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Privatising Royal Mail

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The government is trying to defuse anger over its plans to part-privatise Royal Mail. Postal workers are protesting in Westminster after it was announced that 30 percent of the company is to be sold off. Meanwhile, Prime Minister Gordon Brown faces a large backbench rebellion as 145 MPs – more than a fifth of all members of the House of Commons – sign a motion rejecting the move.

Ministers argue that Royal Mail simply cannot survive in its current state and must be part-privatised to fund modernisation and fight a growing pensions deficit which, the Royal Mail pension scheme trustees have warned, could be “significantly larger” than the 5.9 billion pounds estimated last year.

Royal Mail Chief Executive Adam Crozier told MPs he expected the deficit to grow to between eight and 9 billion pounds when it is revalued. Crozier also pointed towards a “rapidly declining” number of letters posted, with an 8 percent drop predicted next year.

But one Labour MP has said that it would be “political suicide” for the party to effectively go back on its election pledge to keep the Royal Mail in public hands. Unions are also against the plan, saying it could lead to job losses and open the door to full privatisation.

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